Understanding SBE Certification for Small Business Enterprises

If you’re a business owner, chances are that you own a small business. According to the government’s definition, 99.9 percent of all businesses in the United States are “small,” totaling an impressive 33.2 million small businesses countrywide. As a small business owner, your importance doesn’t go unnoticed. About half of all Americans—61.6 million people—work for a small business, and small businesses generate trillions of dollars of economic activity [1]. 

Given small businesses' vital role in the national economy, myriad government-ordained opportunities are available to help small business owners find valuable resources and contracts. The first step to taking advantage of those opportunities is pursuing small business enterprise (SBE) certification. 

Discover the SBE certification process, various specialized SBE certifications available to certain populations, and how you stand to benefit. 

What is SBE certification?

While no singular, official SBE certification exists, the US Small Business Administration (SBA) offers several various small business certifications that verify a small business as such and that come with federal benefits. 

As the national resource for American small businesses, the SBA sets the standard for what qualifies as a small business based on size. While size standards differ according to a business’s North American Industry Classification System (NAICS) code, with codes assigned according to industry, the SBA considers most non-manufacturing businesses with average annual receipts totaling less than $7.5 million to be small businesses. Manufacturing businesses may be “small” if they have 500 or fewer employees [2].  

The SBA offers four distinct certifications to small businesses:

• 8(a) small business certification

• HUBZone small business certification

• Women-owned small business certification

• Veteran-owned small business certification

Additionally, you can simply register as a small business with the SBA to gain the ability to compete for federal, small business-specific contracts. 

However, even if you aren’t pursuing one of the SBA’s certifications if you want to qualify for some state-run SBE certification programs, you may still need to meet the SBA’s national guidelines for a small business. This is the case, for example, in Texas. 

Key benefits of SBE certification for small business owners 

All of these certifications come with key benefits, such as: 

• Access to federal contracts available specifically to small businesses

• Access to business development-related resources

• Access to federal surplus property

For many, the most valuable of these benefits is the first, with the government awarding a certain percentage of all federal prime contracting dollars to small businesses that fall within certain categories. For example, 13 percent of federal prime contracting dollars go to small disadvantaged businesses or those that would likely obtain 8(a) small business certification. Meanwhile, 5 percent each goes to certified women-owned small businesses and certified veteran-owned small businesses, and 3 percent goes to certified HUBZone small businesses [3].  

Additionally, pursuing small business certification will increase your overall credibility as a small business owner, giving you a competitive edge.

Who should pursue SBE certification?

If your small business meets the SBA's criteria, exploring the benefits of obtaining SBE certification may be worthwhile. Although you’ll need time and organization to gather the correct documentation and apply for certification, the process is often free, depending on your chosen certification—and the benefits can be substantial.

 If you can answer “yes” to the following questions, you’re likely a good candidate for pursuing SBE certification:

• Does your business record average annual receipts totaling less than $7.5 million and/or have 500 or fewer employees?

• Do you want access to federal contracts specifically set aside for certain businesses and business owners? 

• Do you need technical or similar business support, touching on topics like small business accounting?

• Do you hope to grow and scale your small business in the future?

Furthermore, those who qualify for specific, demographic-based SBE certifications might seek out the SBE certification opportunities most suited to their unique needs and qualifications. For example, women-owned small business certification recognizes businesses that not only meet size requirements but are also at least 51 percent woman-owned and controlled, among other eligibility factors [4]. Similarly, veteran-owned small business certification is for small businesses with at least 51 percent veteran ownership [5]. 

HUBZone small business certification certifies small businesses located in a HUBZone or a “historically underutilized business zone.” This certification requires that at least 35 percent of the small business’s employees live within a HUBZone as well [6]. 

The government can award an 8(a) small business certification to businesses where the majority of owners are “socially and economically disadvantaged." [7]. 

How to obtain SBE certification

The first step in obtaining SBE certification is determining your eligibility and which certification you’d like to apply for. Each certification comes with its own unique eligibility requirements. 

To make the process as easy as possible, the SBA has created a small business certification hub, where you can fill out a brief questionnaire that determines your eligibility for any of the available small business certifications. The certification hub also provides a “Prepare for Application” page, which walks you through the steps of preparing your application and gathering the necessary documentation based on your business type: sole proprietorship, partnership, LLC, or corporation [8].

For example, if your business is a sole proprietorship, you will need to gather the following documents for your application:

• Proof of citizenship

• IRS SS4 TIN Insurance Letter

• Most Recent 1040 Schedule C

• Other documentation (e.g., active agreements) determined on a case-by-case basis 

After submitting your application, the SBA will typically make a decision regarding your certification within 90 days. Applying for SBE certification through the SBA is free, however, similar, third-party, non-federal small business certifications do exist. These include the Small Business Administration’s approved third-party women-owned small business certifiers, such as the National Women Business Owners Corporation and the Women’s Business Enterprise National Council, among others. Third-party small business certifications may come with fees, ranging from a few hundred to a few thousand dollars. Third-party certification processes may also require longer wait times, up to eight months in some instances. 

Build skills to prepare for SBE certification or advance your career

When you obtain SBE certification, you’ll find a bevy of new business opportunities, whether that’s through federally awarded contracts, increased credibility, or the many business resources offered by the SBA. 

Beyond pursuing SBE certification, consider advancing your career and the success of your small business in other ways as well—like building business and leadership skills via courses available on Coursera. From the University of North Texas Bachelor of Science in General Business program to the University of Michigan Leading People and Teams Specialization, you can utilize online courses to prepare for your next career move.